FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

              (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT of 1934

               For the quarterly period ended September 30, 2000
   --------------------------------------------------------------------------

                                       OR

             ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT of 1934

For the transition period from _____________________ to _____________________


                             Commission file number
                                     0-21558
                     ---------------------------------------


                            CNL Income Fund XII, Ltd.
-----------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


            Florida                                         59-3078856
-----------------------------------------           -------------------------
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                            Identification No.)


450 South Orange Avenue
Orlando, Florida                                            32801-3336
-----------------------------------------           -------------------------
(Address of principal executive offices)                    (Zip Code)


Registrant's telephone number
(including area code)                                     (407) 540-2000
                                                    -------------------------


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by  Sections  13 or 15(d)  of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days. Yes X No _________



<PAGE>


                                    CONTENTS





Part I                                                                 Page

   Item 1.    Financial Statements:

                  Condensed Balance Sheets                              1

                  Condensed Statements of Income                        2

                  Condensed Statements of Partners' Capital             3

                  Condensed Statements of Cash Flows                    4

                  Notes to Condensed Financial Statements               5-8

   Item 2.    Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                   9-13

   Item 3.   Quantitative and Qualitative Disclosures About
                  Market Risk                                           13

Part II

   Other Information                                                    14-15















<PAGE>

                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                            CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                           September 30,             December 31,
                                                                2000                     1999
                                                         -------------------      -------------------
<S> <C>
                             ASSETS

Land and buildings on operating leases, less
    accumulated depreciation                                   $ 21,340,033             $ 20,780,828
Net investment in direct financing leases                         9,790,673               11,441,924
Investment in joint ventures                                      4,666,305                3,415,888
Mortgage note receivable                                             47,819                   51,301
Cash and cash equivalents                                         1,586,937                1,870,366
Receivables, less allowance for doubtful accounts
    of $86,898 and $14,491, respectively                             96,365                   80,791
Due from related parties                                                 --                    5,222
Prepaid expenses                                                     31,163                   13,552
Lease costs, less accumulated amortization
    of $10,152 and $6,142, respectively                              52,271                   56,281
Accrued rental income, less allowance for doubtful
    accounts of $8,717 and $6,323, respectively                   2,752,435                2,724,774
                                                         -------------------      -------------------

                                                               $ 40,364,001             $ 40,440,927
                                                         ===================      ===================

               LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                                               $     34,985             $    136,006
Accrued and escrowed real estate taxes payable                       19,627                   11,897
Distributions payable                                               956,252                  956,252
Due to related parties                                              125,641                   74,909
Rents paid in advance and deposits                                   11,974                   50,987
                                                         -------------------      -------------------
    Total liabilities                                             1,148,479                1,230,051

Partners' capital                                                39,215,522               39,210,876
                                                         -------------------      -------------------

                                                               $ 40,364,001             $ 40,440,927
                                                         ===================      ===================


           See accompanying notes to condensed financial statements.

<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                         CONDENSED STATEMENTS OF INCOME



                                                               Quarter Ended                  Nine Months Ended
                                                               September 30,                    September 30,
                                                           2000            1999             2000             1999
                                                        ------------    ------------     ------------     ------------
Revenues:
    Rental income from operating leases                   $ 642,373       $ 611,730       $2,026,840       $1,846,362
    Earned income from direct financing leases              259,613         370,818          880,353        1,119,392
    Contingent rental income                                  2,495           1,712            4,209            6,394
    Interest and other income                                30,026          27,282           91,907           72,217
                                                        ------------    ------------     ------------     ------------
                                                            934,507       1,011,542        3,003,309        3,044,365
                                                        ------------    ------------     ------------     ------------

Expenses:
    General operating and administrative                     53,484          40,451          162,684          119,332
    Professional services                                    17,471           8,345           37,441           30,921
    Management fees to related party                         11,589          10,568           33,165           32,023
    Real estate taxes                                            --             603               --            4,099
    State and other taxes                                        --              --           20,834           20,764
    Depreciation and amortization                           102,205          84,031          300,861          252,808
    Transaction costs                                            --          69,671           77,277          197,353
                                                        ------------    ------------     ------------     ------------
                                                            184,749         213,669          632,262          657,300
                                                        ------------    ------------     ------------     ------------

Income Before Equity in Earnings of Joint
Ventures and Gain on Sale of Land and
Building                                                    749,758         797,873        2,371,047        2,387,065

Equity in Earnings of Joint Ventures                         87,691          76,127          247,950          266,333

Gain on Sale of Land and Building                           106,772              --          254,405           74,714
                                                        ------------    ------------     ------------     ------------

Net Income                                                $ 944,221       $ 874,000       $2,873,402       $2,728,112
                                                        ============    ============     ============     ============

Allocation of Net Income:
    General partners                                      $   8,375       $   8,739       $   26,190       $   26,634
    Limited partners                                        935,846         865,261        2,847,212        2,701,478
                                                        ------------    ------------     ------------     ------------

                                                          $ 944,221       $ 874,000      $2,873,402        $2,728,112
                                                        ============    ============     ============     ============

Net Income Per Limited Partner Unit                       $    0.21       $    0.19      $     0.63        $     0.60
                                                        ============    ============     ============     ============

Weighted Average Number of Limited Partner
    Units Outstanding                                     4,500,000       4,500,000        4,500,000        4,500,000
                                                        ============    ============     ============     ============

           See accompanying notes to condensed financial statements.
<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                    CONDENSED STATEMENTS OF PARTNERS' CAPITAL


                                                       Nine Months Ended               Year Ended
                                                         September 30,                December 31,
                                                              2000                        1999
                                                    -------------------------     ---------------------

General partners:
    Beginning balance                                           $    259,109               $   223,305
    Net income                                                        26,190                    35,804
                                                    -------------------------     ---------------------
                                                                     285,299                   259,109
                                                    -------------------------     ---------------------

Limited partners:
    Beginning balance                                             38,951,767                39,167,536
    Net income                                                     2,847,212                 3,609,239
    Distributions ($0.64 and $0.85 per
       limited partner unit, respectively)                        (2,868,756 )              (3,825,008 )
                                                    -------------------------     ---------------------
                                                                  38,930,223                38,951,767
                                                    -------------------------     ---------------------

Total partners' capital                                        $  39,215,522              $ 39,210,876
                                                    =========================     =====================


           See accompanying notes to condensed financial statements.
<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                       CONDENSED STATEMENTS OF CASH FLOWS


                                                                     Nine Months Ended
                                                                       September 30,
                                                                 2000                 1999
                                                            ----------------     ---------------

Increase (Decrease) in Cash and Cash Equivalents

    Net Cash Provided by Operating Activities                    $2,837,999          $2,952,968
                                                            ----------------     ---------------

    Cash Flows from Investing Activities:
       Proceeds from sale of land and building                    2,019,357             467,300
       Additions to land and buildings                           (1,009,067 )                --
       Investment in joint ventures                              (1,267,513 )          (135,825 )
       Collections on mortgage note receivable                        4,551               2,134
       Payment of lease costs                                            --             (16,435 )
                                                            ----------------     ---------------
              Net cash provided by (used in) investing
                  activities                                       (252,672 )           317,174
                                                            ----------------     ---------------

    Cash Flows from Financing Activities:
       Distributions to limited partners                         (2,868,756 )        (3,003,756 )
                                                            ----------------     ---------------
              Net cash used in financing activities              (2,868,756 )        (3,003,756 )
                                                            ----------------     ---------------

Net Increase (Decrease) in Cash and Cash Equivalents               (283,429 )           266,386

Cash and Cash Equivalents at Beginning of Period                  1,870,366           2,362,980
                                                            ----------------     ---------------

Cash and Cash Equivalents at End of Period                       $1,586,937          $2,629,366
                                                            ================     ===============

Supplemental Schedule of Non-Cash Investing and
    Financing Activities:

       Mortgage note accepted in exchange for sale of
         land and building                                       $       --          $   55,000
                                                            ================     ===============

       Construction costs incurred and unpaid at end
         of period                                               $       --          $   30,000
                                                            ================     ===============

       Distributions declared and unpaid at end of
         period                                                  $  956,252          $  956,252
                                                            ================     ===============


           See accompanying notes to condensed financial statements.
</TABLE>

<PAGE>



                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
           Quarters and Nine Months Ended September 30, 2000 and 1999


1.       Basis of Presentation:

         The accompanying  unaudited  condensed  financial  statements have been
         prepared in accordance  with the  instructions  to Form 10-Q and do not
         include  all  of the  information  and  note  disclosures  required  by
         generally  accepted  accounting  principles.  The financial  statements
         reflect all adjustments,  consisting of normal  recurring  adjustments,
         which are, in the opinion of management,  necessary to a fair statement
         of the results for the interim periods presented. Operating results for
         the  quarter and nine  months  ended  September  30,  2000,  may not be
         indicative  of the  results  that may be  expected  for the year ending
         December  31, 2000.  Amounts as of December  31, 1999,  included in the
         financial   statements,   have  been  derived  from  audited  financial
         statements as of that date.

         These unaudited financial statements should be read in conjunction with
         the financial statements and notes thereto included in Form 10-K of CNL
         Income Fund XII, Ltd. (the  "Partnership")  for the year ended December
         31, 1999.

2.       Land and Buildings on Operating Leases:

         Land and buildings on operating leases consisted of the following at:
<TABLE>
<CAPTION>

                                                     September 30,          December 31,
                                                         2000                   1999
                                                  -------------------    -------------------
<S> <C>

              Land                                       $ 12,216,812           $ 12,262,712
              Buildings                                    11,547,811             10,645,853
                                                  -------------------    -------------------
                                                           23,764,623             22,908,565
              Less accumulated depreciation                (2,424,590 )           (2,127,737 )
                                                  -------------------    -------------------

                                                         $ 21,340,033           $ 20,780,828
                                                  ===================    ===================
</TABLE>

         Effective  January 1, 2000, the Partnership  amended the lease relating
         to its property in St. Ann, Missouri, to allow for a rent reduction. As
         a result,  the Partnership  reclassified  the building  portion of this
         asset from net  investment  in direct  financing  lease to  building on
         operating  lease. In accordance with statement of Financial  Accounting
         Standards No. 13, "Accounting for Leases," the Partnership recorded the
         reclassified asset at the lower of

<PAGE>



                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
           Quarters and Nine Months Ended September 30, 2000 and 1999


2.       Land and Buildings on Operating Leases - Continued:

         original cost,  present fair value, or present  carrying value. No loss
         was recorded on the reclassification.

         In April 2000,  the  Partnership  reinvested  the net sales proceeds it
         received from the sale of the property in Cleveland,  Tennessee,  along
         with additional funds, in a Krystal property located in Pooler, Georgia
         (see Note 3). In connection  therewith,  the Partnership entered into a
         long term,  triple-net lease with terms  substantially  the same as its
         other leases.

         In July 2000, the Partnership  sold its property in Bradenton,  Florida
         to an unrelated third party for approximately $1,227,900,  resulting in
         a gain of approximately $106,800 for financial reporting purposes. This
         property was  originally  acquired by the  Partnership  in 1992 and had
         costs totaling approximately $1,000,000, excluding acquisition fees and
         miscellaneous  acquisition  expenses;  therefore,  the Partnership sold
         this  property  for  approximately  $227,900 in excess of its  original
         purchase price.  The Partnership used the net sales proceeds to acquire
         an  interest  in  an  additional  property,   with  an  affiliate,   as
         tenants-in-common. ( See Note 4).

3.       Net Investment in Direct Financing Leases:

         In  March  2000,  the  Partnership  sold  its  property  in  Cleveland,
         Tennessee,  for which the land and  building had been  classified  as a
         direct financing lease, for $806,460 and received net sales proceeds of
         approximately  $791,500,  resulting in a gain of approximately $147,600
         for financial reporting purposes.  In connection  therewith,  the gross
         investment   (minimum  lease  payments  receivable  and  the  estimated
         residual  value) and unearned  income relating to the land and building
         were removed from the accounts.  This property was originally  acquired
         by the  Partnership  in December  1992 and had a cost of  approximately
         $622,800,  excluding  acquisition  fees and  miscellaneous  acquisition
         expenses;   therefore,   the   Partnership   sold  the   property   for
         approximately  $168,700 in excess of its original  purchase  price.  In
         April 2000, the Partnership  reinvested the net sales  proceeds,  along
         with additional funds, in a Krystal property located in Pooler, Georgia
         (see Note 2).

4.       Investment in Joint Ventures:

         In July 2000, the Partnership  sold its property in Bradenton,  Florida
         to an unrelated third party for approximately $1,227,900. (See Note 2).
         The Partnership reinvested the net

<PAGE>



                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
           Quarters and Nine Months Ended September 30, 2000 and 1999


4.       Investment in Joint Ventures - Continued:

         sales  proceeds  to acquire an  interest  in a  Bennigan's  Property in
         Colorado Springs,  Colorado with CNL Income Fund VII, Ltd. ("CNL VII"),
         a Florida limited partnership and an affiliate of the general partners,
         as tenants-in-common.  In connection therewith, the Partnership and the
         affiliate entered into an agreement whereby each co-venturer will share
         in  the  profits  and  losses  of the  property  in  proportion  to its
         applicable  percentage  interest.  The Partnership will account for its
         investment  in  this  property   using  the  equity  method  since  the
         Partnership will share control with the affiliate.  As of September 30,
         2000, the Partnership owned a 57 percent interest in this property.

         The  following  presents  the  joint  ventures'   combined,   condensed
         financial information at:
<TABLE>
<CAPTION>

                                                                      September 30,          December 31,
                                                                          2000                   1999
                                                                    ------------------     ------------------
<S> <C>
              Land and buildings on operating leases, less
                 accumulated depreciation and allowance for
                 loss on land                                             $ 6,189,126            $ 4,030,064
              Net investment in direct financing leases,
                  less allowance for impairment in
                  carrying value                                            1,933,751              1,953,200
              Cash                                                             39,562                 40,636
              Receivables                                                         193                 34,276
              Accrued rental income                                           271,647                219,436
              Other assets                                                        960                    732
              Liabilities                                                      31,679                 40,517
              Partners' capital                                             8,403,560              6,237,827
              Revenues                                                        522,727                645,168
              Net income                                                      439,099                568,191
</TABLE>

         The  Partnership  recognized  income  totaling  $247,950,  and $266,333
         during the nine months ended September 30, 2000 and 1999, respectively,
         from these  joint  ventures,  of which  $87,691  and $76,127 was earned
         during the quarters ended September 30, 2000 and 1999, respectively.


<PAGE>


                            CNL INCOME FUND XII, LTD.
                         (A Florida Limited Partnership)
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
           Quarters and Nine Months Ended September 30, 2000 and 1999


5.       Termination of Merger:

         On March 1, 2000,  the general  partners  and CNL  American  Properties
         Fund, Inc.  ("APF") mutually agreed to terminate the Agreement and Plan
         of  Merger  entered  into in  March  1999.  The  general  partners  are
         continuing  to evaluate  strategic  alternatives  for the  Partnership,
         including alternatives to provide liquidity to the limited partners.


<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         CNL Income Fund XII,  Ltd.  (the  "Partnership")  is a Florida  limited
partnership  that was organized on August 20, 1991, to acquire for cash,  either
directly or through  joint  venture  arrangements,  both newly  constructed  and
existing  restaurants,  as well as Properties upon which  restaurants were to be
constructed  (the  "Properties"),  which are leased  primarily  to  operators of
national and regional  fast-food and family-style  restaurant chains. The leases
are generally  triple-net leases,  with the lessees  responsible for all repairs
and maintenance,  Property taxes,  insurance and utilities.  As of September 30,
2000,  the  Partnership  owned 48 Properties,  which  included  interests in six
Properties  owned by joint  ventures in which the  Partnership is a co-venturer,
and one Property owned as tenants-in-common.

Capital Resources

         The  Partnership's  primary source of capital for the nine months ended
September  30,  2000 and 1999 was cash  from  operations  (which  includes  cash
received from tenants, distributions from joint ventures, and interest and other
income  received,  less  cash  paid for  expenses).  Cash  from  operations  was
$2,837,999 and $2,952,968 for the nine months ended September 30, 2000 and 1999,
respectively.  The  decrease in cash from  operations  for the nine months ended
September 30, 2000, as compared to the nine months ended September 30, 1999, was
primarily a result of changes in income and expenses as described in "Results of
Operations" below and changes in the Partnership's working capital.

         Other  sources and uses of capital  included the  following  during the
nine months ended September 30, 2000.

         During the nine months ended September 30, 2000, the  Partnership  sold
its  Property in  Cleveland,  Tennessee,  to a third  party,  for  $806,460  and
received net sales proceeds of approximately $791,500, resulting in a total gain
of approximately  $147,600 for financial reporting  purposes.  This Property was
originally  acquired  by the  Partnership  in December  1992,  and had a cost of
approximately $622,800, excluding acquisition fees and miscellaneous acquisition
expenses;  therefore,  the  Partnership  sold  the  Property  for  approximately
$168,700  in  excess  of  its  original  purchase  price.  In  April  2000,  the
Partnership reinvested the net sales proceeds, along with additional funds, in a
Property  in  Pooler,  Georgia.  The  transaction  relating  to the  sale of the
Property in Cleveland,  Tennessee and the reinvestment of the net sales proceeds
was structured to qualify as a like-kind exchange transaction for federal income
tax purposes.  However,  the Partnership will distribute  amounts  sufficient to
enable the limited  partners to pay federal and state income taxes, if any (at a
level reasonably assumed by the general partners), resulting from the sale.

         In July 2000, the Partnership  sold its Property in Bradenton,  Florida
to an unrelated third party for approximately $1,227,900, resulting in a gain of
approximately  $106,800 for  financial  reporting  purposes.  This  Property was
originally   acquired  by  the  Partnership  in  1992  and  had  costs  totaling
approximately   $1,000,000,   excluding   acquisition  fees  and   miscellaneous
acquisition  expenses;   therefore,  the  Partnership  sold  this  Property  for
approximately $227,900 in excess of its original purchase price. The Partnership
used the net sales proceeds to acquire an interest in an additional  Property as
tenants-in-common,  with an  affiliate,  as  described  below.  The  transaction
relating to the sale of the Property in Bradenton,  Florida and the reinvestment
of the net sales  proceeds  was  structured  to qualify as a like-kind  exchange
transaction  for federal  income tax purposes.  However,  the  Partnership  will
distribute  amounts sufficient to enable the limited partners to pay federal and
state  income  taxes,  if any  (at a level  reasonably  assumed  by the  general
partners), resulting from the sale.

         The  Partnership  reinvested  the net  sales  proceeds  from  the  sale
described above in a Bennigan's Property in Colorado Springs,  Colorado with CNL
Income  Fund VII,  Ltd.  ("CNL  VII"),  a  Florida  limited  partnership  and an
affiliate  of  the  general  partners,  as   tenants-in-common.   In  connection
therewith,  the Partnership and the affiliate entered into an agreement where by
each  co-venturer  will  share in the  profits  and  losses of the  property  in
proportion to its applicable  percentage interest.  The Partnership will account
for  its  investment  in  this  property  using  the  equity  method  since  the
Partnership will share control with the affiliate. As of September 30, 2000, the
Partnership owned a 57 percent interest in this property.

         Currently,  rental income from the Partnership's Properties and any net
sales proceeds from the sale of Properties,  pending  reinvestment in additional
Properties,  are invested in money market accounts or other  short-term,  highly
liquid  investments,  such as demand  deposit  accounts at commercial  banks and
certificates  of deposit  with less than a 30-day  maturity  date,  pending  the
Partnership's  use  of  such  funds  to  pay  Partnership  expenses  or to  make
distributions  to the  partners.  At September  30, 2000,  the  Partnership  had
$1,586,937 invested in such short-term investments, as compared to $1,870,366 at
December 31, 1999. The funds  remaining at September 30, 2000,  after payment of
distributions  and  other  liabilities,  will be used to meet the  Partnership's
working capital and other needs.

Short-Term Liquidity

         The Partnership's  short-term liquidity  requirements consist primarily
of the operating expenses of the Partnership.

         The Partnership's  investment strategy of acquiring Properties for cash
and  leasing  them  under  triple-net  leases to  operators  who meet  specified
financial standards minimizes the Partnership's  operating expenses. The general
partners  believe that the leases will  continue to generate cash flow in excess
of operating expenses.

         The general  partners have the right,  but not the obligation,  to make
additional capital  contributions if they deem it appropriate in connection with
the operations of the Partnership.

         Total  liabilities  of  the  Partnership  decreased  to  $1,148,479  at
September 30, 2000, from $1,230,051 at December 31, 1999,  primarily as a result
of a decrease  in accounts  payable  and rents paid in advance  and  deposits at
September  30,  2000,  as  compared  to  December  31,  1999.  The  decrease  in
liabilities at September 30, 2000 was partially  offset by an increase in due to
related  parties at September  30, 2000,  as compared to December 31, 1999.  The
general  partners  believe that the  Partnership  has sufficient cash on hand to
meet its current working capital needs.

         The Partnership  generally  distributes cash from operations  remaining
after the payment of operating  expenses of the Partnership,  to the extent that
the general partners  determine that such funds are available for  distribution.
Based on current and, for the nine months ended September 30, 2000,  anticipated
future cash from  operations,  the  Partnership  declared  distributions  to the
limited  partners of $2,868,756 for each of the nine months ended  September 30,
2000 and 1999  ($956,252 for each of the quarters  ended  September 30, 2000 and
1999).  This represents  distributions  for each applicable nine months of $0.64
per unit ($0.21 per unit for each applicable  quarter).  No  distributions  were
made to the general  partners for the  quarters and nine months ended  September
30, 2000 and 1999. No amounts  distributed to the limited  partners for the nine
months ended September 30, 2000 and 1999 are required to be or have been treated
by the  Partnership  as a return of capital  for  purposes  of  calculating  the
limited   partners'  return  on  their  adjusted  capital   contributions.   The
Partnership  intends to continue to make  distributions  of cash  available  for
distribution to the limited partners on a quarterly basis.

Long-Term Liquidity

         The  Partnership  has no long-term  debt or other  long-term  liquidity
requirements.

Results of Operations

         During the nine months ended September 30, 1999, the Partnership  owned
and leased 44 wholly owned  Properties  (which  included  one  Property  sold in
December  1998) and  during  the nine  months  ended  September  30,  2000,  the
Partnership  owned and leased 43 wholly  owned  Properties  (which  included two
Properties  sold during  2000),  to  operators  of  fast-food  and  family-style
restaurant  chains.  In  connection  therewith,  during  the nine  months  ended
September 30, 2000 and 1999, the Partnership  earned  $2,907,193 and $2,965,754,
respectively,  in rental  income from  operating  leases and earned  income from
direct  financing leases from these  Properties,  $901,986 and $982,548 of which
was earned during the quarters ended September 30, 2000 and 1999,  respectively.
The  decrease  in rental and earned  income  during the  quarter and nine months
ended  September 30, 2000 was also partially due to a decrease of  approximately
$46,900 and $71,600 during the quarter and nine months ended September 30, 2000,
respectively, as a result of the sale of the Property in Cleveland, Tennessee in
March 2000, and the Property in Bradenton, Florida in July 2000, as described in
"Capital Resources." This decrease was partially offset by an increase in rental
and earned income of  approximately  $28,800 and $54,400  during the quarter and
nine months ended September 30, 2000,  respectively,  due to the reinvestment of
the net sales  proceeds  in a Property  in Pooler,  Georgia  in April  2000,  as
described in "Capital Resources."

         The  decrease  in rental  and  earned  income  was  partially  due to a
decrease of approximately $49,000 and $68,700 during the quarter and nine months
ended September 30, 2000, respectively,  due to the fact that during the quarter
and nine months  ended  September  30,  2000,  the  Partnership  established  an
allowance for doubtful  accounts for past due rental  amounts  relating to three
Properties in accordance with the  Partnership's  policy.  No such allowance was
recorded  during the quarter and nine  months  ended  September  30,  1999.  The
general  partners will continue to pursue  collection of past due rental amounts
relating  to these  Properties  and will  recognize  such  amounts  as income if
collected.

         The  decrease in rental and earned  income  during the quarter and nine
months ended  September 30, 2000 was also due to a decrease in rental and earned
income of approximately $5,400 and $19,200,  respectively,  due to the fact that
the lease  relating to the Property in St. Ann,  Missouri was amended to provide
for rent  reductions  from January  2000 through the end of the lease term.  The
Partnership  does not  believe  that the rent  reductions  will have a  material
adverse effect on the results of operations of the Partnership.

         The decrease in rental and earned  income  during the nine months ended
September  30,  2000 was  partially  offset by an  increase in rental and earned
income due to the fact that during the nine months ended September 30, 2000, the
Partnership collected and recognized as income approximately $38,200 in past due
rental amounts  relating to Long John Silver's,  Inc. which filed for bankruptcy
during 1998 and rejected the leases relating to three of the eight Properties it
leased. As of September 30, 2000, the Partnership had sold two of the Properties
for which the leases had been  rejected  and had entered into a lease with a new
tenant for the remaining  Property for which the lease had been  rejected.  As a
result of entering into a new lease with a new tenant,  rental and earned income
increased by approximately $7,200 and $50,800 during the quarter and nine months
ended  September  30, 2000,  respectively,  due to the  Partnership  recognizing
rental income on this re-leased Property.  During 1999, Long John Silver's, Inc.
assumed and affirmed its five remaining leases and the Partnership has continued
receiving  rental payments  relating to these leases.  However,  the increase in
rental  and  earned  income was  partially  offset by a  decrease  of $8,000 and
$23,900 for the quarter and nine months ended September 30, 2000,  respectively,
due to the  Partnership  granting Long John Silver's,  Inc. rent  concessions on
three of the affirmed leases.

         In addition,  during the nine months ended September 30, 2000 and 1999,
the  Partnership  owned  and  leased  seven and five  Properties,  respectively,
indirectly  through  joint  venture  arrangements  or as  tenants-in-common.  In
connection therewith,  during the nine months ended September 30, 2000 and 1999,
the Partnership earned $247,950 and $266,333, respectively,  $87,691 and $76,127
of which was earned  during the  quarters  ended  September  30,  2000 and 1999,
respectively.  The decrease in net income earned by joint ventures was partially
due to the fact that  during the quarter and nine  months  ended  September  30,
1999,  Middleburg  Joint  Venture,  in  which  the  Partnership  owns an  87.54%
interest,  collected and  recognized as income past due rental amounts for which
the joint venture had previously established an allowance for doubtful accounts.
The decrease in net income earned by joint ventures  during the quarter and nine
months ended  September 30, 2000 was partially  offset by an increase due to the
fact that subsequent to September 30, 1999, the Partnership  invested in Bossier
City Joint  Venture and acquired an interest in a Property in Colorado  Springs,
as tenants-in-common, with an affiliate, as described in "Capital Resources".

         Operating expenses,  including  depreciation and amortization  expense,
were $632,262 and $657,300  during the nine months ended  September 30, 2000 and
1999,  respectively,  $184,749  and $213,669 of which were  incurred  during the
quarters  ended  September  30,  2000 and 1999,  respectively.  The  decrease in
operating  expenses during the quarter and nine months ended September 30, 2000,
as  compared  to the  quarter and nine months  ended  September  30,  1999,  was
partially due to the fact that the Partnership  incurred less transaction  costs
relating to the  general  partners  retaining  financial  and legal  advisors to
assist them in evaluating and  negotiating the proposed merger with CNL American
Properties Fund, Inc. ("APF") due to the termination of the proposed merger,  as
described below in "Termination of Merger."

         The decrease in operating  expenses was partially offset by an increase
in administrative expenses for servicing the Partnership and its Properties.  In
addition, the decrease in operating expenses was partially offset by an increase
in  depreciation  expense  relating to the fact that subsequent to September 30,
1999, the Partnership  reclassified  the leases for its Properties in Asheville,
North  Carolina  and  Clarksville,  Tennessee  from direct  financing  leases to
operating leases due to lease amendments.

         As a result of the sale of the Property in Bradenton,  Florida,  during
the  quarter and nine  months  ended  September  30,  2000,  and the sale of the
Property in  Cleveland,  Tennessee,  during the nine months ended  September 30,
2000, as described above in "Capital  Resources," the Partnership recorded gains
of $106,772 and of $254,405 for financial  reporting purposes during the quarter
and nine months ended September 30, 2000, respectively.  As a result of the sale
of the  Property  in  Morganton,  North  Carolina in May 1999,  the  Partnership
recorded a gain of $74,714  for  financial  reporting  purposes  during the nine
months ended September 30, 1999.

Termination of Merger

         On March 1, 2000,  the  general  partners  and APF  mutually  agreed to
terminate  the  Agreement  and Plan of Merger  entered  into in March 1999.  The
general  partners are  continuing  to evaluate  strategic  alternatives  for the
Partnership,   including  alternatives  to  provide  liquidity  to  the  limited
partners.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         No material  changes in the  Partnership's  market risk  occurred  from
December  31,  1999  through  September  30,  2000.  Information  regarding  the
Partnership's  market risk at December 31, 1999 is included in its Annual Report
on Form 10-K for the year ended December 31, 1999.


<PAGE>


                           PART II. OTHER INFORMATION


Item 1.     Legal Proceedings. Inapplicable.

Item 2.     Changes in Securities.  Inapplicable.

Item 3.     Default upon Senior Securities.  Inapplicable.

Item 4.     Submission of Matters to a Vote of Security Holders.  Inapplicable.

Item 5.     Other Information.   Inapplicable.

Item 6.     Exhibits and Reports on Form 8-K.

            (a)   Exhibits

                  3.1      Affidavit and  Certificate of Limited  Partnership of
                           CNL Income Fund XII, Ltd. (Included as Exhibit 3.2 to
                           Registration  Statement No.  33-43278-01 on Form S-11
                           and incorporated herein by reference.)

                  4.1      Affidavit and  Certificate of Limited  Partnership of
                           CNL Income Fund XII, Ltd. (Included as Exhibit 3.2 to
                           Registration  Statement No.  33-43278-01 on Form S-11
                           and incorporated herein by reference.)

                  4.2      Amended and Restated Agreement of Limited Partnership
                           of CNL Income Fund XII, Ltd. (Included as Exhibit 4.2
                           to Form 10-K filed with the  Securities  and Exchange
                           Commission on April 15, 1993, and incorporated herein
                           by reference.)

                  10.1     Management  Agreement  between  CNL Income  Fund XII,
                           Ltd. and CNL Investment  Company (Included as Exhibit
                           10.1 to Form  10-K  filed  with  the  Securities  and
                           Exchange   Commission   on  April   15,   1993,   and
                           incorporated herein by reference.)

                  10.2     Assignment   of   Management   Agreement   from   CNL
                           Investment Company to CNL Income Fund Advisors,  Inc.
                           (Included as Exhibit 10.2 to Form 10-K filed with the
                           Securities and Exchange Commission on March 31, 1995,
                           and incorporated herein by reference.)

                  10.3     Assignment  of Management  Agreement  from CNL Income
                           Fund  Advisors,  Inc.  to  CNL  Fund  Advisors,  Inc.
                           (Included as Exhibit 10.3 to Form 10-K filed with the
                           Securities and Exchange  Commission on April 1, 1996,
                           and incorporated herein by reference.)

                  27       Financial Data Schedule (Filed herewith.)

            (b)   Reports on Form 8-K

                  No  reports on Form 8-K were filed  during the  quarter  ended
                  September 30, 2000.



<PAGE>



                                   SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  the  registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

         DATED this 10th day of November, 2000.


                                    By:       CNL INCOME FUND XII, LTD.
                                              General Partner


                                             By:/s/JAMES M. SENEFF, JR.
                                                -----------------------------
                                                JAMES M. SENEFF, JR.
                                                Chief Executive Officer
                                                (Principal Executive Officer)


                                             By:/s/ROBERT A. BOURNE
                                                -----------------------------
                                                ROBERT A. BOURNE
                                                President and Treasurer
                                                (Principal Financial and
                                                Accounting Officer)